The transaction, known as GreenPoint Mortgage Funding Trust
2007-HE1 and insured by Syncora, resulted in more than
$168.6 million in unreimbursed insurance claims after about two
years, according to the complaint, filed yesterday in New York
state Supreme Court in Manhattan.

Syncora, based in New York, won part of a federal court
lawsuit against Bear Stearns affiliate EMC Mortgage Corp. on
March 1 in an earlier case involving the transaction. Bear
Stearns and EMC are now part of JPMorgan Chase & Co.

“Each day the evidence continues to mount of the
egregious, widespread fraud perpetrated by Bear Stearns in
connection with its mortgage securitization business and the
catastrophic consequences for the participants in the
securitizations,” Syncora said in its new state court
complaint.

Bear Stearns was the underwriter of the transaction while
EMC was the sponsor. U.S. District Judge Paul A. Crotty in New
York ruled March 25 that Syncora notified EMC of 1,300 mortgages
with defects and asked EMC to cure them. EMC agreed to cure only
20 of the mortgages, according to that ruling.

Rejected Combination

Crotty separately rejected a bid by Syncora to add
JPMorgan’s Bear Stearns unit to the federal lawsuit because that
request wasn’t filed in a timely fashion, the judge said.

Jennifer Zuccarelli, a spokeswoman for New York-based
JPMorgan, declined to comment today.

Bear Stearns securitized 9,871 GreenPoint loans in the
transaction with an aggregate principal balance of about
$666 million, according to the state court complaint. All except
for two of those were second mortgages obtained by borrowers as
revolving lines of credit.

A third-party consultant hired to re-underwrite samples of
the securitized loans found a 92 percent breach rate, Syncora
said in the complaint. That conclusion was based on an analysis
of 1,431 mortgage loans included in the transaction involving a
combined outstanding principal of $131 million, it said.

The insurer is seeking equitable and punitive damages over
claims it was fraudulently induced to participate in the
transaction.